Google-backed Chinese video and music file-sharing firm Xunlei, once sued by six Hollywood studios for film piracy, hopes to raise $200 million in a U.S. initial public offering and is hiring JPMorgan Chase and Deutsche Bank to get ready.
The company, whose name is pronounced "shoon-lay," will follow Chinese video-sharing firm Youku and e-commerce site Dangdang into the U.S. market, Bloomberg News said on Thursday, citing sources familiar with the IPO plans of the Shenzhen-based outfit.
Xunlei, which also offers online games, had about 190 million online video users at the end of 2010, according to Beijing-based consultancy Analysys International. That's a substantial chunk of the 457 million Chinese government estimates show were online by the end of 2010.
Xunlei would hope to repeat the performance of the U.S. shares of Youku, China's biggest online video site, which surged 161% in their Dec. 8 New York debut, posting the sharpest first-day gain in a U.S. IPO since shares of leading Chinese search-engine Baidu were listed in 2005.
If the listing plans are for real, Xunlei will have to convince individual investors in the U.S. markets that it's playing fair and is not exposed to the sort of copyright infringement lawsuits it faced three years ago.
In January 2007, the Motion Picture Association of America first pointed the finger at Xunlei for allowing unauthorized downloading of its Hollywood studio members' films.
Later that year, Xunlei attracted investment from Google, from Fidelity Asia Ventures, a Hong Kong-based firm led by Daniel Auerbach, a former board member of Yahoo! China-owner Alibaba, and from Ceyuan Ventures, a Beijing-based firm advised by John Wadsworth, honorary chairman of Morgan Stanley Asia.
In 2008, six Hollywood studios filed a civil complaint against Xunlei in a Shanghai court, saying its peer-to-peer technology enabled the unauthorized download of 78 movies, including Spider-man 3, War of the Worlds and Miami Vice.
The MPA member companies sought $975,000 and Xunlei's public acknowledgment of copyright infringement and a promise to cease and desist all such activities, said MPA Asia-Pacific deputy director and legal counsel Frank Rittman at the time.
In February 2008, Xunlei paid roughly $21,000 in damages to Shanghai Youdu Broadband Technology for profiting from the illegal online distribution of Confession of Pain starring Tony Leung and Takeshi Kaneshiro. Youdu owned online distribution rights to the film.